China’s economy grew a record 18.3% in the first quarter of 2021 compared to the same quarter last year.
It’s the biggest jump in gross domestic product (GDP) since China started keeping quarterly records in 1992.
However, Friday’s figures are below expectations, with a Reuters poll of economists having predicted 19% growth.
They are also heavily skewed, and less indicative of strong growth, as they are being compared to last year’s huge economic contraction in which China’s economy shrank 6.8% due to nationwide lockdowns at the peak of its Covid-19 outbreak in the first quarter of 2020.
“The national economy made a good start,” said China’s National Bureau of Statistics, which released the first quarter data. But it added: “We must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities.”
Other key figures released by China’s statistics department also point to a continuing rebound. However, experts say these figures are also unusually strong because they are being compared against extremely weak numbers from last year.
Industrial output for March rose 14.1% over a year ago, while retail sales grew 34.2%.
“Promisingly, the monthly indicators suggest that industrial production, consumption and investment all gained pace in March on a sequential basis, following the weakness in the first two months,” Louis Kuijs, head of Asia economics at research and consultancy firm Oxford Economics told the BBC.
However, some analysts predicted a number of sectors will slow as government fiscal and monetary support is reduced.
Yue Su, the Economist Intelligence Unit’s principal economist for China, said while the latest figures show that the country’s economic recovery is broad-based, some production and export activity could have been “front-loaded” into the first quarter, suggesting slower growth ahead.
“Trade performance and domestic industrial activities for the rest of year might not be able to maintain such strong momentum, due to lack of measures to stimulate domestic economy,” she said.
The figures nevertheless suggest China has continued to gain economic momentum, after reporting 6.5% GDP growth in the final quarter of 2020.
Helped by strict virus containment measures and emergency relief for businesses, the economy has recovered steadily since the pandemic hit.
“The upshot is that with the economy already above its pre-virus trend and policy support being withdrawn, China’s post-Covid rebound is levelling off,” Julian Evans-Pritchard, senior china economist at Capital Economics, told Reuters.
“We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend.”